Senators Introduce Bill to Reform Farm Payments

Senators Introduce Bill to Reform Farm Payments

On Thursday, June 9, Senators Chuck Grassley (R-IA) and Tim Johnson (D-SD) introduced the Rural America Preservation Act of 2011, a bill designed to lower the per farm cap on farm commodity program payments, simplify eligibility, and ensure that payments flow to working farmers.

Senator Grassley has previously championed similar legislation, co-sponsored for many years by former Senator Byron Dorgan (D-ND) and in the last Congress by former Senator Russ Feingold (D-WI). The bill received strong bipartisan support in the Senate, winning the votes of a majority of Senators in 2002 and again in 2007. It did not become law, however.

The bill would lower the direct payment cap from $40,000 to $20,000 for an individual or twice that for a married couple where both spouses are actively engaged in the farming operation. The bill would also lower the cap on counter-cyclical payments from $65,000 to $30,000 ($60,000 for an actively engaged couple) and re-institute a cap on loan deficiency payments and marketing loan gains at $75,000 ($150,000 for an actively engaged couple). The combined cap on all payments for a married couple would be $250,000.

To receive farm payments, current law requires a contribution of 1,000 hours of labor on the farm or involvement in its management. However, the vague and largely unenforceable regulatory standard for “actively managing” farm operations has foiled lawmakers’ attempts to target payments to working farmers. This bill would clarify the definition of management to require ongoing and direct involvement in farm activities to stop the current evasion of payment limits. Closing the current management loophole is widely viewed by experts as the linchpin to any attempt to stop current abusive practices that allow mega farms to receive millions of dollars in taxpayer subsidies.

“There’s no problem with a farmer growing his operation, but the taxpayer should not have to subsidize it. There comes a point where some farms reach levels that allow them to weather the tough financial times on their own. Smaller farms do not have the same luxury, but they play a pivotal role in producing this nation’s food,” said Senator Grassley in his statement on the Senate floor Thursday.

Senator Johnson added, “Farm payments need to be targeted to those who need it, the small and mid-size family farmers in South Dakota and across the nation.”

NSAC Policy Director Ferd Hoefner added these thoughts: “In every survey and poll on this issue, the vast majority of farmers in all regions of the country support payment limit reform. The measure has failed to become law due to the power and influence mega farms wield in Washington and within trade associations. Times have changed, however, and fiscal pressures guarantee that commodity program policy is about to change. The only question is whether the cuts will be taken entirely out of the hides of rank and file farmers or whether the nation’s largest operations will finally be asked to share in the sacrifice and contribute to deficit reduction. While the measure introduced today by Senators Grassley and Johnson is not all the reform that is ultimately needed, it is the critical and fundamental starting point for any real reform.”NSAC Comments on Obama FY 2012 Agriculture Budget
Comments of Ferd Hoefner, NSAC Policy Director:

The President’s FY 2012 budget calls for deep cuts to farm bill mandatory spending for farm conservation with over $1 billion in permanent rescissions. As in their FY 2011 budget request, the big three programs targeted for reductions are the Environmental Quality Incentives Program (EQIP), the Conservation Stewardship Program (CSP), and the Wetlands Reserve Program (WRP).

We believe these reductions are irresponsible and unfair. Natural resource and environmental needs related to agriculture are great and farmer demand for these programs continues to outstrip the supply of dollars. No other farm bill mandatory funding accounts were similarly targeted.

In our view, either everything should be on the table or nothing should be. Appropriations bills, moreover, are not the right vehicle to consider cuts to the farm bill. That should be a matter for the Agriculture Committee to consider as part of a comprehensive review of the need for and effectiveness of all farm bill programs. Chopping out over $1 billion in farm bill resources before that debate even begins will make it far more difficult to reach agreement on a fair and fiscally responsible farm bill deal.

The President’s budget does propose once again to reduce commodity program payment limitations, but unlike the proposed conservation cuts, this proposal is not included in the President’s proposed FY 2012 appropriations bill language.

We support the thrust of the President’s proposed cut to the per-farm cap for commodity program direct payments from $80,000 a year to $60,000 a year for a married couple. In the face of high commodity prices and an overinflated land market, though, we think Congress should go further by reducing the limit to $40,000 and making the payments and the limit on payments more responsive to economic need. The National Sustainable Agriculture Coalition is a grassroots alliance that advocates for federal policy reform supporting the long-term social, economic, and environmental sustainability of agriculture, natural resources, and rural communities.